1) Testator S Intent Controls (CC Art. 1611)

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e.Interpretation (CC art. 1611-1616)

1) Testator’s intent controls (CC art. 1611)

2) “Saving construction” is preferred (CC art. 1612)

3) Uncertainty re identity of object (CC art. 1613)

DH 121. T, who owns 200 shares of Cajun, Inc. stock, makes out a testament in which he leaves 100 shares of that stock to X. Sometime later T makes out another testament in which he leaves 50 shares of that stock to X. When T dies, he still has the same 200 shares of stock. X then demands that he be put into possession of “150 of T’s 200 shares of Cajun, Inc. stock.” The executor of the testament objects, contending that X is entitled only to 50 shares of that stock. Who’s right? Why?

4) After-acquired property included (CC art. 1614)

DH 122. T makes out a testament in which he leaves “all the property I possess” to X. Sometime later, T acquires 100 shares of Cajun, Inc. stock. Is the stock included within the scope of the legacy to X? Why or why not? Would the result have been the same under the old law? Why or why not? See CC arts. 1720-1722 (1870).

DExempted dispositions

Some dispositive acts that qualify as donations are excepted, by virtue of special state or federal legislation, from all or part of the “common regime” of donations law (i.e., the law that we’ve just finished studying). These exceptional dispositions are identified below.

1Exceptions under state law

a)Life insurance

To which, if any, of the rules of donations law are life insurance benefits subject? Explain. Read CC art. 1505.C; then read the statutes and jurisprudence that follow:

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La. R.S. 22:647. Exemption of proceeds; life, endowment, annuity

A. The lawful beneficiary, assignee, or payee including the insured's estate, of a life insurance policy or endowment policy, heretofore or hereafter effected shall be entitled to the proceeds and avails of the policy against the creditors and representative of the insured and of the person effecting the policy or the estate of either, and against the heirs and legatees of either such person, and such proceeds and avails shall also be exempt from all liability for the debt of such beneficiary, payee, or assignee or estate, existing at the time the proceeds or avails are made available for his own use.

. . .

C. The provisions of Sub-section A and B of this Section shall apply:

(1) Whether or not the right to change the beneficiary is reserved or permitted in the policy or contract; or

(2) Whether or not the policy or contract is made payable to the person whose life is insured, to his estate or to the estate of an annuitant if the beneficiary, assignee or payee shall predecease such person; except, that this Sub-section shall not be construed so as to defeat any policy or contract provision which provides for disposition of proceeds in the event the beneficiary, assignee or payee shall predecease the insured or annuitant.

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Sizeler v. Sizeler,

127 So. 388 (La. 1930)

[In the life insurance policy that Otto Sizeler (the deceased) had taken out on himself, he named “Annie F. Sizeler, wife of the insured,” as the beneficiary. After Otto died, his sons (by a prior marriage, of course) challenged Annie’s right to receive the proceeds of the policy.]

The grounds [for the challenge]. . . are [t]hat the marriage . . . of Otto Sizeler to Miss Annie Fels, his niece, was in violation of a law of the state of Louisiana prohibiting marriage between uncle and niece . . . .

It is therefore alleged by plaintiffs that defendant was the mere concubine of Otto Sizeler, and, as such, was incapable of receiving the entire insurance . . ., for the reason that the policies of life insurance were donations mortis causa, and were made in violation of article 1481 of the Civil Code,[1] which declares that those who have live in open concubinage are incapable of making donations to each other . . . .

. . .

. . . [T]he rules of our Civil Code relating to donations inter vivos and mortis causa have no application to life insurance policies . . . .

In the case of Mary Ticker v. Metropolitan Life Ins. Co., Mr. Justice St. Paul, then a judge of the Court of Appeals for the Parish of Orleans, in reviewing our jurisprudence on the subject, said in part:

As we appreciate the jurisprudence of this State, a life insurance policy is a contract sui generis, governed by rules peculiar to itself, the outgrowth of judicial precedent and not legislation.

For although it is quite certain that such a contract, when wholly gratuitous as to the beneficiary, can be assimilated only to a donation either inter vivos or mortis causa, yet the Supreme Court of the State has uniformly refused to apply to life insurance policies the rules applicable to donations . . . .

Thus this court has repeatedly refused to apply to such policies the provisions of the Civil Code relative to donations inter vivos, to-wit, that they are revocable when made to one’s husband or wife, and subject to collation when made to one’s children or descendants. . . . .

And a fortiori the court has refused to apply to such policies the fundamental principle applicable to donations mortis causa, to-wit, that such donations are without avail until after the payment of the debts of the deceased, the court holding in every instance that the proceeds of such policies form no part of the estate of the deceased, and inure to the beneficiary directly and by the sole terms of the policy itself. . . .

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b)Annuities

To which, if any, of the rules of donations law are annuity benefits subject? Explain. Read CC art. 1505.C; then read the following statutes:

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La. R.S. 22:647. Exemption of proceeds; life, endowment, annuity

. . .

B. The lawful beneficiary, assignee, or payee, including the annuitant's estate, of an annuity contract, heretofore or hereafter effected, shall be entitled to the proceeds and avails of the contract against the creditors and representatives of the annuitant or the person effecting the contract, or the estate of either, and against the heirs and legatees of either such person, saving the rights of forced heirs, and such proceeds and avails shall also be exempt from all liability for any debt of such beneficiary, payee, or assignee or estate, existing at the time the proceeds or avails are made available for his own use.

C. The provisions of Sub-section A and B of this Section shall apply:

(1) Whether or not the right to change the beneficiary is reserved or permitted in the policy or contract; or

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c)Death benefits from retirement (pension) plans (accounts)

To which, if any, of the rules of donations law are annuity benefits subject? Explain. Read CC art. 1505.D; then read the following statutes and jurisprudence:

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T.L. James and Co., Inc. v. Montgomery,

332 So.2d 834 (La. 1976)

[The decedent, Thomas Montgomery, Jr. designated his son by his first marriage, Thomas Montgomery, III, the beneficiary of the death benefits from his retirement plan with his employer, T.L. James and Co., Inc. At the time of his death the decedent was married to his second wife, by whom he had a son, Monty George. The surviving spouse claimed the retirement funds were community property. The court agreed. This part of the case is omitted. Monty George claimed the designation of Thomas III as beneficiary impinged his rights as a forced heir. On original hearing the court held the contractual designation of the beneficiary was a complete nullity because it did not meet the requirements of the Civil Code for a valid testamentary or inter vivos donation.][2]

TATE, J.

Effect of contractual designation of a beneficiary to the decedent's interest in their funds of the plans

Having amplified and reaffirmed the essential holding of our original opinion, we now approach a supplementary issue (to reconsider which, was the primary purpose of granting rehearing): What is the effect, if any, of the decedent's contractual designation of a beneficiary to the now-payable proceeds attributable to his account in the funds?

This contractual agreement, as we have held, cannot (in the absence of legislation so authorizing) prejudice the rights of forced heirs or the community ownership of spouses of the wage earner, essentially, because rights of forced heirship and of spouses in community acquisitions are fundamental concepts of our legal system.

In our original opinion, however, we went further: We held that the contractual designation of a beneficiary was a complete nullity which transferred no property interest to the beneficiary, because it did not meet the requirements of the Civil Code for a valid testamentary disposition nor for a valid donation inter vivos.

Upon reconsideration, for reasons to be elaborated, we now conclude that, so long as the contractual devolution of the decedent's interest to the beneficiary does not infringe upon the legitime of a complaining forced heir nor upon the community ownership of a complaining spouse, no prohibition of law prevents the courts from recognizing the contractual rights of the beneficiary to the ownership of the proceeds (so acquired by reason of the contract between the deceased employee, his employer, and the respective plans).

We thus hold, consistent with the views expressed in the earlier part of this opinion (reaffirming the rationale of our original opinion as to these issues), that, although the contractual beneficiary may receive in full ownership the share of the funds passing to him by virtue of the decedent's contractual designation of him as beneficiary, he does so with the obligation to account to any complaining forced heir or spouse in community if his receipt of proceeds violates either the former's legitime or the latter's community ownership rights (as set forth more fully in the earlier part of this opinion). Where, before the disbursement to the beneficiary, the payors (as here) have received written notice of opposing claims of the estate or of a surviving spouse, they may provoke a concursus in which the claims of the beneficiary, of the estate (in which claims of forced heirs may be adjudicated), and of the surviving spouse to the proceeds may be apportioned in accordance with the views above set forth.

We thus adopt a judicial resolution of the competing legal interests analogous to that developed by our state courts in resolving the somewhat similar issues arising in federal savings bond cases -- where likewise, by statute, a form of devolution of a property interest was recognized as valid, but was nevertheless subjected to the judicial requirement of an accounting, where requested, to the claims of any forced heir whose legitime was thereby prejudiced or of any spouse whose community ownership interests was thereby violated. See Winsberg v. Winsberg, 220 La. 398, 56 So.2d 730 (1952); Succession of Guerre, 197 So.2d 738 (La. App. 4th Cir. 1967); Succession of Videau, 197 So.2d 655 (La. App. 4th Cir. 1967); Comment, 25 La. L. Rev. 108, 108-19 (1964).

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La. R.S. 9:2449. Individual retirement accounts; payment of benefits

A. Any benefits payable by reason of death from an individual retirement account established in accordance with the provisions of 26 U.S.C. 408, as amended, shall be paid as provided in the individual retirement account agreement to the designated beneficiary of the account. Such payment shall be a valid and sufficient release and discharge of the account holder for the payment or delivery so made and shall relieve the trustee, custodian, insurance company or other account fiduciary from all adverse claims thereto by a person claiming as a surviving or former spouse or a successor to such a spouse.

B. No account holder paying a beneficiary in accordance with this Section shall be liable to the estate or any heir of the decedent nor shall the account holder be liable for any estate, inheritance, or succession taxes which may be due the state.

C. The provisions of this Section shall apply notwithstanding the fact the decedent designates a beneficiary by last will and testament.

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NOTE

In Succession of Jones, 537 So.2d 825 (La. App. 5th Cir. 1989), the court concluded that a qualified Keogh Plan (§401 of the Internal Revenue Code) falls within the scope of CC art. 1505(D).

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2Exceptions under federal law: savings bonds

From which, if any, of the rules governing donations are federal “savings bonds” exempted? Explain. Read the following doctrine and jurisprudence:

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Cynthia Samuel, Katherine Spaht, & Cynthia Picou,

Successions & Donations: Cases & Readings 194-95 (Fall 2000)

United States Savings Bonds consist of two different varieties: 1. co-owner bonds, payable to either of two different co-owners upon the death of the first; and 2. beneficiary bonds, payable to A or upon his death to the named beneficiary.

In Winsberg v. Winsberg, 220 La. 398, 56 So.2d 730 (1952), the court concluded that even though such savings bonds were gifts made in contemplation of death that the disposition of ownership of the bonds was not subject to Louisiana law on form for donations mortis causa:

Thus it is plain that, whereas the gift of the bonds was a disposition mortis causa, it has no standing under our law as it does not comply with any of the forms prescribed for testaments by the articles of the Civil Code, Arts. 1574 et seq. Accordingly, it would be absolutely null but for the vitality given it by the laws under which the bonds were issued. This Federal Contract, which is a recognition by the Government of its obligation to the purchaser of the bond for a sum certain in money to be paid on his death to a designated person, is, of course, enforceable between the parties thereto in accordance with the conditions stated therein. And, obviously, we think, Louisiana is without right to change the beneficiary of the contract or to insist that the Federal Government recognize someone other than the payee as the owner of the bonds. Hence, in the nature of things, we are confronted with the fact that the U.S. Savings bond plan establishes an additional method of disposing of property mortis causa, which has been superimposed by Federal law and which is to be considered effective notwithstanding that it is not in the form prescribed by our Code.

But though these contracts are entitled to recognition as another way to dispose of property in prospect of death, it does not follow that they may be employed so as to nullify the laws applicable to the devolution of property or to confer upon the donees greater rights than they would have had if the devise had been in the form of a last will and testament. * * * Indeed, it seems manifest that the regulations of the Treasury Department for the payment of savings bonds (relied on by defendant in this case), were designed solely to facilitate the Government, by providing a simple method for the liquidation of these obligations, so that it would not be subjected to the inconvenience and delays attendant to the settlement of conflicting or disputed claims. There was not, in our opinion, any intention to interfere with the enforcement of the laws of descent and distribution of the various States. Therefore, forasmuch as the payment on death clause contained in such bonds must be considered as a valid appendage to our laws respecting the forms for dispositions mortis causa, it appears logical to apply all provisions pertaining to testamentary dispositions, except those dealing with forms, in determining rights and liabilities under such a devise.

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Succession of Guerre,

197 So.2d 738 (La. App. 4th Cir. 1967)

BARNETTE, J.

This is a proceeding initiated on rules to show cause, directed to the testamentary executor of the decedent's succession, seeking a judgment ordering and directing him to strike certain United States Savings Bonds from the detailed descriptive list of property belonging to the succession. The rules further seek a judgment ordering the executor to deliver the bonds to the respective surviving alternate payees as unconditional owners thereof, free of all liens, claims or charges, on the authority of Free v. Bland, 369 U.S. 663, 82 S. Ct. 1089, 8 L.Ed. 2d 180 (1962).

The trial court dismissed the rules on authority of Yiatchos v. Yiatchos, 376 U.S. 306, 84 S. Ct. 742, 11 L.Ed. 2d 724 (1964), holding the principle of constructive fraud, as pronounced in that case, modified the rule of Free v. Bland, and that the forced heirs could not be deprived of their legitime by the device employed. From that judgment the movers have appealed.

The decedent Louis Francis Guerre died on August 21, 1966, leaving three children; namely, Mrs. Mabel Guerre Binnings, Mrs. Mildred Guerre Fabacher and Mrs. Hazel Guerre Gibson, all forced heirs. In his will he left to these named daughters "the legitime allowed them by law."

The remainder of his property he left to Mrs. Noemie Freret LeBlanc, Sr., Mrs. Marguerite Freret Hetzel and Mrs. Nell Heaphy Broders.

During the years 1961 and 1962, decedent acquired a total of 50 United States Savings Bonds of $1,000 denomination each, all of which were payable to Louis F. Guerre or the respective alternate co-owners . . . .

The bonds are appraised at $42,779.60. They are in possession of Lansing L. Mitchell, testamentary executor, and he has listed them as property belonging to the succession. The balance of the estate consists of $8,941.35 in bank deposits and a small amount of personal effects, making the total value of decedent's estate $52,507.95. Obviously, therefore, the exclusion of the $42,779.60, represented by the bonds from the assets of the succession, would greatly reduce the legitime due the forced heirs.

. . .

The Supreme Court of Louisiana has clearly recognized the authority of Congress in the issuance of United States Savings Bonds to prescribe methods by which the ownership of such bonds can be transmitted or disposed of, in addition to the methods prescribed by the laws of Louisiana. The devices used are the co-owner bonds payable to A or B and the beneficiary form bonds payable to A or upon his death to B. While neither of these methods of transmission or disposition meets the requirements, as to form, of the laws of this State for donations inter vivos or mortis causa, they have been recognized as additional methods for transmitting or disposing of property superimposed on our law by federal law. Winsberg v. Winsberg, 220 La. 398, 56 So.2d 730 (1952); Succession of Weis, 162 So.2d 791 (La. App. 4th Cir. 1964).

While recognizing the supremacy of federal law in this respect, our Supreme Court said in Winsberg:

"But though these contracts are entitled to recognition as another way to dispose of property in prospect of death, it does not follow that they may be employed so as to nullify the laws applicable to the devolution of property or to confer upon the donees greater rights than they would have had if the devise had been in the form of a last will and testament. It is apt to observe that the Federal Government is neither concerned with nor interested in the application and enforcement of State laws respecting succession or inheritance of property. Indeed, it seems manifest that the regulations of the Treasury Department for the payment of savings bonds (relied on by defendant in this case), were designed solely to facilitate the Government, by providing a simple method for the liquidation of these obligations, so that it would not be subjected to the inconvenience and delays attendant to the settlement of conflicting or disputed claims. There was not, in our opinion, any intention to interfere with the enforcement of the laws of descent and distribution of the various States. * * *